Labor reforms against the formal economy and MSMEs – El Sol de México

Congress is calling to accelerate the reform to reduce the work week by one day, from 48 to 40 hours, calling on business and union organizations to present their considerations. It has been indicated that the vote would be after April 20, days before the end of the last period of sessions. Hasty for something so relevant.

It is essential that in this reform, as in all those recently presented in labor matters, the conditions of the majority of the business community are taken into account: micro, small and medium-sized companies. A silent majority in the public debate, key to the economy and employment: more than 4.1 million, more than 50% of GDP and 70% of employment. They can be very affected if the reality of the labor market is not considered, beyond good wishes. Without the resources to adapt to the big ones, just like other proposals made in electoral campaigns.

For hundreds of thousands of formal MSMEs, these changes, if they are not made considering their needs and limitations, and above all if they add up – extraordinary salary increases, more contributions to pensions, more vacation days, the initiative to double the bonus – , may mean the need to go informal, make layoffs, even close.

To begin with, they will further encourage labor informality, based on the distortion that already exists: more than 55% of workers are in that condition.

Structurally correcting this situation is the real pending issue in the labor field, also essential in matters of finance, social security and so that more companies can professionalize, have access to financing, develop and generate more and better jobs.

We should be hearing that from legislators and in campaigns. How to go from a broken labor structure to a robust one, good for workers – all of them and future ones –, for companies and the State. That there are no first-class workers in the formal sector and second-class workers in the informal sector.

As the economist Valeria Moy has commented, as long as we do not have solid foundations of the labor building, improvised or superficial changes will have a limited effect; In any case, ephemeral.

As Coparmex points out, which has been key in strengthening the minimum wage, the latest pension reform, the subcontracting reform and the increase in vacations, despite the positive aspects of these measures, have implied additional costs for companies, without incentives to the creation of formal jobs, productivity and MSMEs.

It’s time to go to the structure. Hastily adding what is now proposed is a recipe that can be lethal for many companies. Along these lines, the 100% increase in the cost of the bonus occurs in a context of companies already under pressure with tax obligations, competition from informality, and a greater workload.

According to the Mexican Institute of Public Accountants (IMCP), new initiatives, such as doubling the bonus, would increase their costs between 30 and 40 percent. The vacation bonus would increase from 25 to 50 percent. In addition, it seeks to increase the paternity leave period from five to 20 days.

It is difficult to oppose that in the public arena, but adding, the days actually worked would be 242, discounting vacations, holidays and mandatory breaks, if the reduction of the work week is also approved. The bill that employers must pay, according to the IMCP, could rise from 365 to 401 days.

It seeks to improve labor rights, but there is a risk that these adjustments encourage the avoidance of labor obligations, in addition to discouraging job creation; of a rout towards informality, in which more workers and people seeking employment will be harmed.

It is unpopular to object to double-digit increases in the minimum wage because of its side effects. Achieving a decent standard of living is a legal and moral imperative. Even so, they do not solve the structural problem that we are facing and inevitably generate distortions. To begin with, they do not reach more than half of the workers.

As Santiago Levy, whose book “Good intentions, bad results” has explained, is still as valid, in essence, as when it was published years ago, legislation or public policy is made as if the informal part of the economy did not exist and the changes In the formal one they could improve the conditions of everyone. In the long run it may be the other way around.

For now, the tabulators, or maximums and minimums by job categories within a company, have been compacted. The base and minimum salary levels are increasingly approaching those of greater responsibility in the structure. Large companies have resources to adjust to these imbalances, which affect not only costs, but also operability and productivity; not MSMEs.

Companies cannot make equivalent increases to those who earn more than the minimum, and at the same time, inflation inevitably erodes real purchasing power. The distortions grow.

As Macario Schettino has explained, the increases in average salaries have not been notable. Two thirds of formal workers earn less than two minimum wages. The wage bill has grown less than in the previous six-year period, measured against the National Consumer Price Index, and with respect to underlying inflation, less than the previous two.

Between what is desirable and what is possible there is always a stretch of necessary efforts – productivity, growth, having a solid structure – that cannot be replaced by decrees, laws or political harangues that do not take into account what hundreds of thousands of businessmen go through to comply. with the payment of payroll every fortnight, formal and informal. Mexico needs to think long term, in-depth solutions, in the foundations.

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